Though I am definitely no fan of going to a car dealership, I prefer going to a dealership over buying a car from a private seller — and from what I can tell, most people feel the same way. Buying a car from a private seller is dodgy, and at times, can even be a very dangerous endeavor.
Buying a car from a private seller has many risks that a standard car sale transaction doesn't have.
You will have to do all the paperwork yourself, and if you don't know how to do the paperwork, it's quite possible that you could end up finding the car you paid for isn't really yours at all. Cases have happened when people were fraudulently sold cars through this method.
If the private seller is a thief, they could actually rob you while you go to inspect the car. Multiple cases involving thugs using cars as bait for robberies also have made headlines in the past.
Basically, it's a risk — but it also allows for a good reward in the form of a great car at a price dealerships would never agree to. Here's how to buy a car from a private seller safely, affordably, and wisely.
First, find a private seller.
A private seller is pretty easy to find if you know where to look. Large cities will often have cars that have "FOR SALE" written on the window with an asking price. In suburban and rural areas, you might have to work a bit harder to find a seller.
Going on a site like Craigslist, looking at local bulletin boards, and even checking out eBay and AutoTrader can yield good results in almost any town.
Vet the private sellers before you learn the paperwork side of how to buy a car from a private seller.
When searching for a private seller, you will have to keep in mind that you do have to watch out for red flags. Not every seller out there is worth doing business with. If you notice the following issues, then you may want to back out of a deal:
- They won't let you drive the car. No test drive should mean that you won't purchase anything. Generally, if sellers won't let you test out the car, it's because there's something terribly wrong with it.
- They won't let your own mechanic inspect the car. This is a bad sign that they are selling a lemon to you — and that they know it. A good private seller will have no problem letting a mechanic examine it.
- They ask you to bring cash with you. This may seem pretty reasonable considering that you're buying a car, but the fact is that this is often an indicator of a robbery shtick.
- The ad about the car is very vague, and the owners won't answer many questions about it. Danger, Will Robinson! This is a sign that they may be trying to sell you a lemon at best or a stolen car at worst. If the private seller isn't upfront about details like mileage, make, model, year, and previous wear and tear do not bother with them.
- They refuse to meet with you during the daytime. A lot of bad things can be hidden in the dark.
- They refuse to meet you away from their private residence and demand you go there alone. This is just common sense. You don't know this seller, so why trust them? Most police stations are willing to have you meet outside so that you can make the sale between you and a private seller primarily because of how unsafe this is.
Once you find a good seller, you can learn how to buy a car from a private seller.
Get as much information about the car as you can before you meet up.
Much of learning how to buy a car from a private seller is the same as learning how to buy a car from a dealership. Knowledge is still power, and that means it's up to you to make sure that you make as educated a purchase as possible.
So, for you, this means that you will need to do the following things:
- Find out the specs of the car's use. Previous owners, prior accidents, mileage, upgrades, maintenance, and more all will matter. It's best not to buy a car that sellers don't have mechanic records to.
- Check state laws on how to buy a car from a private seller. Different states will have different paperwork issues to fill out, and also will have different fees and taxes you'll need to complete. Many local offices can help you with the paperwork.
- Find out what the average cost of this car is at a dealership. Don't buy a car from a private seller at a higher-than-dealership cost. Dealers actually do have to stand by promises more than private sellers do, so if it's going to cost less or equal to go there, you might as well choose the dealer.
- Get the car's VIN, and make sure that a car history search doesn't show something terrible. Many stolen cars have been sold via private seller. Don't fall for that trap. Find out the car's history and make sure you know as much as you can before the sale.
- Get a mechanic to look it over before you sign any papers. Never, ever buy a car from a private seller without a mechanic giving it a once over. You don't know what has happened to that car, and you won't be able to find out without the help of a professional.
- Always test drive the car after it's cooled down. Worn out engines will blow smoke or shake if left to cool, so test drive it cold to get a good idea of this car's actual shape.
If you've seen the car, tested it, and liked it, try to negotiate on a good price — then start the paperwork.
Here's where guides on how to buy a car from a private seller will differentiate from dealership guides. Dealerships will do the paperwork for you, private sellers will have to work with you in order to make sure the paperwork can be done.
Before you sign anything, you need to make sure of the following things:
- The car title is in the seller's hand. No title means that you're not actually buying the car.
- The car titles are clear. If it's not clear, it's probably a bad buy — especially if it has a salvage title. So, don't buy that car. Also, you may want to avoid out of state titles, too.
- If the car title is being held by the bank, you will need to ask to see the loan. The transaction also has to be approved by the bank. In this case, you may end up being liable for the loan payments.
- The car titles match the person's name on their ID. Someone else's name on the title may mean that the car is stolen. If you can't meet the person on the car title and car registration, don't buy the car!
- You have gotten the appropriate paperwork from the DMV. The DMV will typically have forms that you can pick up right in the lobby. Some also will allow you to print them from the website.
- You know the local laws on license plates. If you don't know whether the seller should keep the license plates, or if you'll need new license plates, call the DMV.
Once you have made sure everything is legit in the paperwork, here are the final steps on how to buy a car from a private seller.
- You will go to a safe place with a witness, ideally a bank or police station, and do the transaction's DMV paperwork. It's always good to have official help when filling out paperwork, too.
- You will give the seller the payment via a money order, not a stack of cash. Do not use cash for a private sale, as it's very easy for the cash to get stolen or "lost."
- The person will sign your name on the title and will hand you the title. This declares that you're now the owner of the car.
- You pay the sales tax to the DMV -— or the seller, depending on state law. Check with your DMV to find out how to do this.
- You will request a signed receipt. Ideally, this would all be done in front of someone else, and the receipt would be notarized.
And, that's all you need to know about how to buy a car from a private seller.